BitMex: Becoming a Global Powerhouse Facing Obstacles to Scaling
BitMex: Becoming a Global Powerhouse Facing Obstacles to Scaling
From 2014 to 2017, BitMEX rose to become one of the biggest crypto investment platforms in the world. In a detailed blog post on May 23, 2019, BitMEX narrated their story of becoming an industry force and the upgrades they put out for the platform.
The King of Crypto Derivatives
BitMEX was launched in 2014 by Arthur Hayes, an ex-Citi derivatives trader and banker after he lost his job and fell in love with the concept of Bitcoin.
In 2017, BitMEX’s volume grew by 129x, and this growth continued to spill over into 2018 and 2019. The all-time USD trading record was $8 billion in a single day in July 2018 up until May 11, 2019, when the platform recorded $11 billion in trading volume across all contracts.
The XBTUSD perpetual swap contract, which BitMEX is known for, is the most traded Bitcoin instrument in the world. The option to trade with 100x leverage was the incentive that brought in a considerable number of speculators.
BitMEX users face a plethora of problems from lengthy queues and overloading to scaling limitations and an inconsistent system. This has led to public backlash as to why this continuously happens during volatile times.
The truth lies in the trading infrastructure. Then the system gets overloaded beyond its capabilities, and orders get mass rejected to slow down entities to the order queue. By doing this, BitMEX aims to clear out the current queue so more orders can be added to the engine. When the engine is overloaded, it is performing at peak capacity, but orders still come in faster than they can be processed.
There are also scaling limitations to BitMEX’s servers that are forcing them to research other options into increasing capacity. Horizontal scaling, i.e., adding more servers to share the load has limits on how much speed can be enhanced. This has been a significant impediment at rapidly scaling the engine’s capabilities.
The BitMEX engine team releases multiple weekly updates to keep the platform competitive and as efficient as possible. These changes are being rolled out in continuous small upgrades that amount to a long term re-architecture of the platform. On May 23, 2019, the team pushed a significant infrastructure upgrade to increase capacity by nearly 70 percent.
BTCManager reported the increase in institutional interest in cryptocurrency derivatives. The lack of adequate infrastructure is the biggest impediment to rapid institutionalization of the secondary market. With upgrades coming across BitMEX and Deribit, this may be the newest trend in the crypto investing sphere.
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